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The Congressional Agenda for July

The three-week July work period is set to begin on Capitol Hill this week, with members returning from the Independence Day recess only to resume debate on the same issues that have consumed their attention for the first half of 2017. Health care repeal-and-replace efforts are again front and center as the Senate continues to attempt to cobble together a bill that can secure 50 votes from among the 52 Republican senators. The lengthy process of developing legislation to undo President Obama’s signature health care law, the Affordable Care Act (ACA) has led Republican leadership to put off action on a number of other Republican priorities for the 115th Congress. This deferral is creating a pileup of legislative priorities that have been delayed until the health care issue is resolved. Among the delayed items are comprehensive tax reform and infrastructure modernization. Congress also confronts looming deadlines for a number of authorizations and Fiscal Year (FY) 2018 funding, all set to expire on September 30, 2017. The Senate also has a backlog of executive branch nominees to process. Members of the House are currently scheduled to be in session for only 13 days this month and members of the Senate plan to be in session for 15 days before departing for the annual month-long August recess, leaving a very short window of time for Congress to tackle a growing number of items on its to-do list. Although some members of both parties in both chambers have suggested that Congress forego its August recess, the odds of an August session are still very long.

At the top of the agenda remains Republican efforts deliver on the campaign promise of repealing and replacing the ACA, an issue that has beleaguered Republican leadership in the House and Senate for much of this year. Senate Majority Leader Mitch McConnell postponed a planned vote on the draft Senate Republican health care bill, the Better Care Reconciliation Act (BCRA), until after the Fourth of July recess following mounting pressure from both conservative and moderate members of his conference to make additional changes to the legislation. An analysis by the nonpartisan Congressional Budget Office (CBO) found the draft legislation could account for 22 million more Americans possibly becoming uninsured over ten years, but also found the bill would cut the federal deficit by $321 billion over that same time period. The cost savings would be driven by cuts to Medicaid and lower subsidies to help people buy insurance. Given the narrow Republican majority in the Senate and unanimous opposition expected from Democrats, Leader McConnell can only afford to lose two Republican votes pass the legislation. At least five Republican senators had publicly stated their opposition to the bill before the CBO score was released and the vote delayed, and more senators opposed the current bill during the July 4 recess. Press reports indicate negotiations over the legislation have continued, and that Leader McConnell has submitted several additional proposals to the CBO for analysis, which can be expected as early as this week. The path to a Senate vote remains unclear. Conservative and moderate Republicans oppose the current draft for different reasons. The more moderate members of the conference worry about the cuts to Medicaid and potential loss of coverage for their constituents, while the more conservative opponents argue the bill does not go far enough in repealing all of the provisions of the ACA. Senator Ted Cruz has recently proposed his own compromise that would allow insurers to offer plans that do not meet ACA coverage requirements, but moderates fear that enactment of that bill would likely devastate the remaining ACA-compliant plans. With the stark dichotomous positions within the Republican conference, it is increasingly difficult to see how Leader McConnell can cobble together a bill that will garner the necessary votes for Senate passage.

Leader McConnell himself appeared to acknowledge the reality last week when he suggested that Republicans would have to work in a bipartisan manner to shore up the crumbling ACA infrastructure in most states if Republicans are unable to pass any version of their legislation. Conservative groups immediately hit back at Senator McConnell, a further reflection of the challenges facing the majority party as it tries to enact elements of its agenda with a Republican President in the White House. News reports suggest, however, that Leader McConnell, an unusually accomplished legislative tactician, was correct in wanting a vote prior to July 4. While home over the recess, Republican senators were often confronted by constituents opposed to the bill. Although the votes were not there before the recess, Republicans now appear to be even further from achieving this long-sought legislative goal.

Comprehensive tax reform remains another top priority for congressional Republicans and the White House. The chief tax-writing committee of the House, the Ways and Means Committee, will continue its series of hearings on tax reform proposals, with two hearings scheduled over the next three weeks: one related to the benefits of tax reform for small businesses and a second related to the benefits of such reform for individuals and families. Members of the Senate Finance Committee are reportedly preparing to develop their own legislation. House Ways and Means Committee Chairman Kevin Brady and other key congressional Republicans, including Speaker of the House Paul Ryan, Senate Majority Leader Mitch McConnell, and Senate Finance Committee Chairman Orrin Hatch have reportedly been working with Administration officials, including Gary Cohn, Director of the White House National Economic Council, and Treasury Secretary Steven Mnuchin to coalesce around a tax code overhaul that could quickly pass both chambers.

Even though these factors signal positive steps forward for tax reform legislation, key policy differences remain an obstacle in the negotiating process. The border adjustment tax (BAT) remains the most controversial component of House leadership’s plans for comprehensive tax reform. Ways and Means Chairman Brady recently announced a longer phase-in period for the BAT provision he previously outlined. Still, the BAT continues to face resistance from the retail industry and consumer groups. The members of the conservative House Freedom Caucus have been working on their own tax reform legislation, which would include welfare reform, and have called for leadership to abandon the BAT. Without a concrete proposal the Republican conference can get behind and a shrinking timeline for floor consideration later this year, the opportunity to achieve comprehensive tax reform is shrinking. And the assumption remains that tax reform must be done in 2017 because members are not going to want to vote on the issue in an election year.

The chances for success on any eventual tax reform legislation are also imperiled by key policy differences between different factions of the Republican conference in ongoing budget discussions. Unless both chambers can adopt a budget resolution for Fiscal Year 2018, there will not be a legislative vehicle for reconciliation instructions, a procedural necessity for Republicans to prevent a Democratic filibuster of the eventual tax reform legislation in the Senate. Failure to adopt a budget would in essence compel bipartisan negotiations on tax reform, an approach most Republicans do not yet seem to favor.

As has been the case during other budget debates of recent years, House Republicans are struggling to settle an intra-conference dispute that has pitted fiscal conservatives, who want to cut federal spending and reduce the deficit, against defense hawks, members who want to increase defense spending, while moderates want to try to work out a bipartisan funding deal. House Budget Committee Chairman Diane Black appears to have struck a compromise of $621 billion for defense spending in FY 2018 and $511 billion for nondefense spending. She has been trying to sell that compromise to the Republican conference, but disagreements remain over how to reduce roughly $200 billion in entitlement spending over the next decade in order to achieve the negotiated level of discretionary spending. Another challenge is that leadership has been waiting to consider an FY 2018 budget resolution until the health care reform legislation is resolved, because of the desire to rely on cost savings from the ACA repeal in any FY 2018 budget resolution. The failure of the health care reform effort would have adverse consequences for the budget process as well.

Without an agreed-upon budget resolution setting spending levels for FY 2018, the window to conduct effective work on individual FY 2018 appropriations bills before the end of the current fiscal year is also shrinking. The annual budget blueprint is used to provide appropriators with their discretionary spending levels for the year ahead, but again this year the House and Senate Appropriations Committees are conducting their work without a budget framework. Even without an established topline number, members of the House Appropriations Committee are expected to continue subcommittee markups during the July work period, as they did in June, with discretionary levels set at the current budget resolution level of $511 billion. Democrats and moderate Republicans object to that funding level for domestic programs, arguing that increases are needed for domestic programs if defense programs are to receive increased funding. The Senate Appropriations Committee will start is FY 2018 subcommittee markups this week. Press reports indicate the Committee may be preparing legislation set to roughly the same levels as FY 2017 funding, which could be adjusted at a later time if a new bipartisan agreement is reached.

Members have widely recognized that there is not enough time remaining on the calendar to move all 12 of the annual appropriations measures through each chamber before the September 30 deadline, and a stopgap measure or continuing resolution (CR) will likely be necessary to allow more time to complete this work. The suggestion from Rep. Tom Graves (R-GA) to bundle all 12 of the bills into an omnibus measure, to be presented for a single vote on the House floor rather than 12 separate votes, appears to have considerable support among Republicans in the House, but the concept is likely unworkable in the Senate, where the GOP majority would need the support of several Democratic members in order to even consider the legislation.

While these major budget and policy issues will continue to consume much of the attention on Capitol Hill and in the media in July, there are several items ready for floor consideration in the House and Senate this month.

The Senate will continue to spend a great deal of floor time processing nominations. The pace at which executive branch positions are being filled has been much slower than during previous administrations. Nominations are being made more slowly by the administration, and Senate Democrats have been invoking various procedural mechanisms to delay consideration of executive nominees. When the Senate returns this week, it will take up the nomination of law professor Neomi Rao to serve as head of the Office of Information and Regulatory Affairs in the Office of Management and Budget, in effect the regulatory czar. Consideration of additional nominees to fill sub-Cabinet executive branch positions will follow on the floor and hearings for nominees will continue in committees. Among these, the Senate Judiciary Committee will hold a high-profile hearing to consider the nomination of Christopher Wray to serve as Director of the Federal Bureau of Investigation, replacing the fired James Comey. Given the circumstances of Director Comey’s dismissal and the ongoing investigations in alleged Russian interference in the 2016 elections, the Wray hearings are likely to dominate the news when they occur. Barring any unforeseen issues arising during the hearings, Mr. Wray should be confirmed before the August recess.

Legislation to reauthorize four different Food and Drug Administration (FDA) user fees was advanced on a bipartisan basis by the Senate Health, Education, Labor and Pensions Committee in May (S. 934) and the House Energy and Commerce Committee in June (H.R. 2430), potentially setting up floor votes in both chambers at some point in the next three weeks. The legislation would renew and enhance the four FDA drug, medical device, biosimilar and generic drug user-fee provisions. The current law expires on September 30, and the FDA has indicated it may begin noticing layoffs if the law is not renewed prior to the August recess. The administration’s views on the legislation are unclear because neither version of the bill includes the President’s FY 2018 budget proposal of a substantial increase in user fees in order to make up for a proposed decrease in the FDA’s budget.

The House and Senate Armed Services Committees each reported their versions of the annual National Defense Authorization Act (NDAA) for FY 2018 in June. The House will consider its version of the legislation this week, and the Senate version should see floor consideration too in July. The annual authorization bill sets Department of Defense policy and authorizes spending levels for the year ahead. The House Committee advanced its $696 billion authorization bill by a vote of, 60-1 while the Senate Armed Services Committee unanimously reported its $700 billion authorization for national defense operations and overseas contingency operations. Aside from their marginally different topline allocations, the House and Senate bills diverge slightly on policy and when passed by their respective chambers, the two versions of the legislation will have to be reconciled by a conference committee.

Legislation to reauthorize and reform the National Flood Insurance Program (NFIP) may get floor time in the House in July. The current authorization for the NFIP expires on September 30. The NFIP has been under scrutiny following its handling of claims following Superstorm Sandy in 2012 and a ballooning $24 billion debt. Numerous members have called for reforms to the program, including proposals for privatization. House Financial Services Committee Chairman Jeb Hensarling successfully pushed seven NFIP-related bills through the committee in late June. These bills are expected to be packaged together into a single vehicle when brought to the House floor for consideration. Among the measures are administrative reforms to the NFIP to increase accountability, the establishment of a $10,000 cap on the annual chargeable risk premium for any single family home, and the development of private or community flood maps as an alternative to the NFIP’s outdated maps. One of the major points of contention is the duration of the NFIP. Republicans support a five-year reauthorization, but Democrats are calling for a longer term, up to ten years. Also at issue is how much of the program should be run out of the private insurance market. The Senate Banking Committee is also reportedly working on a draft bill, and some of its members have already introduced their own legislation. As with a number of other items on the congressional agenda, the window to reach a consensus on a final product that can pass both chambers is getting shorter as the deadline approaches. Failure to extend the NFIP by September 30 would not doom the program, because an extension would likely be included in any CR if the issue is not resolved by then.

Senators may begin debate on a bipartisan energy bill introduced by Energy and Natural Resources Committee Chairman Lisa Murkowski and Ranking Member Maria Cantwell. During the 114th Congress, Senator Murkowski and Senator Cantwell successfully shepherded to Senate passage the first comprehensive energy bill (S. 2012) since 2007 and appear poised to attempt the same legislative achievement this year. The Senate legislation was subject to joint House-Senate conference committee negotiations last fall to resolve differences between House and Senate bills, but conferees did not come to an agreement before the close of the 114th Congress. The new Senate bill, the Energy and Natural Resources Act of 2017 (S. 1460), largely follows the previous iteration, providing updates and improvements to national energy efficiency, grid infrastructure, energy supply, government accountability, and land conservation. Senate Majority Leader McConnell began the Rule 14 process to place the legislation on the Senate Legislative Calendar, allowing it to skip committee consideration.

Efforts to reauthorize the Federal Aviation Administration (FAA) are underway in both chambers, and members are again up against a September 30 deadline for the current authorization. House Transportation and Infrastructure Committee Chairman Bill Shuster introduced the 21st Century Aviation Innovation, Reform & Reauthorization (AIRR) Act, a six-year reauthorization bill which contains a controversial proposal to privatize the country’s air traffic control (ATC) system, a move supported by President Trump and included in his first budget submission to Congress. The full committee voted to approve Chairman Shuster’s legislation on a party-line vote, 32-25. A bipartisan proposal has emerged in the Senate, where Commerce, Science, and Transportation Committee Chairman John Thune and Ranking Member Bill Nelson have introduced a four-year reauthorization bill that does not include privatizing ATC operations. The bill was approved and reported to the Senate by the Committee on a voice vote. Chairman Thune has acknowledged publicly that there is insufficient support in the Senate for the ATC privatization. That major difference between the two bills will present an enormous hurdle for conference negotiations should the House and Senate each pass its own version of the FAA bill.

Finally, the various inquiries related to Russia’s alleged interference in the 2016 elections will continue to draw congressional and media attention. The investigation continues to be a focus of the House and Senate Intelligence Committees, as they continue to call in witnesses and request evidence. Prior to the recess, former Homeland Security Secretary Jeh Johnson appeared in a public session before the House Intelligence Committee and acknowledged that the Obama Administration had knowledge of Russian hacking activities in the summer of 2016, but waited to publicize any information for fear of politicizing the election process. The House Oversight and Government Reform Committee and the Senate Judiciary Committee are carrying out investigations over former National Security Advisor Michael Flynn’s conduct and potential ties to Russia, as well as allegations that the President sought to stop the FBI from investigating General Flynn. Senator Dianne Feinstein, Ranking Member of the Senate Judiciary Committee and a member of the Senate Intelligence Committee, has called on Judiciary Committee Chairman Chuck Grassley to expand the committee’s probe to include “all issues that raise a question of obstruction of justice.” She also asked Chairman Grassley to consider issuing subpoenas to compel testimony from Director of National Intelligence Dan Coats and National Security Agency Director Mike Rogers about whether President Trump asked them to take any action related to the FBI’s Russia investigation. Director Coats and Director Rogers both refused to discuss their personal conversations with the President at a Senate Intelligence Committee hearing last month. Department of Justice Special Counsel Robert Mueller is also leading an independent investigation into any potential ties between the Trump 2016 presidential campaign and Russia. All of this activity will continue in the wake of President Trump’s face-to-face meeting with Russian President Vladimir Putin last week at the G20 summit in Germany.

July is looking increasingly important to the Republican agenda, and the Democrats are likely to double down on their heretofore consistent and unwavering opposition, especially in the Senate, to that agenda in the hope of sending Republicans home without any significant accomplishments (aside from the confirmation of Justice Gorsuch) for the August recess.